EDD computer project came in late, overbudget

The state's new $158 million online system for managing and paying disability insurance claims, which was intended to speed financial help to workers who are sick, hurt or parents of a new child, was three years late and about $123 million over its original budget when it launched last fall, kicking off a rocky transition that left thousands waiting for help.

Approved in 2006, the project to automate the state's antiquated paper-based system for filing disability claims was expected to take three years to complete and cost $35 million, according to a report released in May by the state Legislative Analysts Office. The finished product, later dubbed SDI Online, would allow people to file disability insurance paperwork online and streamline the program's management and payment of claims.

After three years of delays, the system finally launched in October, kicking off a labor-intensive transition from paper. During the transition, the program has accepted claims filed on both paper and via SDI Online, an increased workload that slowed service and delayed payments to thousands of hurt and sick workers.

On Thursday, people waiting in the crowded lobby at the disability program's office in Santa Ana said the online system had not helped them resolve problems with claims. Some said they logged in but couldn't see the status of their payments. Others said they could see their benefit information, but they couldn't do anything else.

Kay Siakisini, of Orange, said an eye surgery in late September left her mostly blind in one eye and temporarily unable to work at her job as a retail merchandiser. When her first payment was late, she was unable to get help from the automated phone system (it hung up on her every time she called), and her attempts to track payments using SDI Online were just as fruitless.

"I spent I think four hours on the computer one day and it was just ridiculous," said Siakisini. "So I just keep coming back here. I give up."

It took about five weeks to get her first payment and four weeks to get the next one, she said.

Officials with the Employment Development Department, the state agency that runs the disability insurance program, apologized to the public and assured people that SDI Online works.

It said the cost of producing the system was justified and was in no way the fault of its developer, Deloitte Consulting LLP, a New York-based company that has been criticized, sued and attacked by lawmakers for its work on state projects that went over budget and failed.

EDD's original plan was to hire a company to develop the computer project within nine months, according to the LAO report. But in 2007, officials amended the plan because "procurement-related delays" caused the contracting process to take about 16 months, delaying the whole project by 23 months. Officials revised projected costs downward to $33 million.

The biggest cost increase from the original estimate -- about $84 million -- happened during the contract-bidding process in 2009, state officials said.

"After extensive research was conducted by two vendors who submitted bids, both companies came to the conclusion that the completion of the project would entail more time, money and expertise than the EDD was first able to estimate," EDD officials said Monday in a statement to the Watchdog.

One of the two companies, Unisys Corp., did not meet the bidding requirements, so its bid could not be reviewed, said Kevin Callori, a spokesman for EDD. So EDD awarded the contract to the other bidder, Deloitte Consulting.

The state agreed to pay Deloitte $59 million to develop SDI Online and 17 "interfaces," or tools to allow communication between SDI Online and other systems, state officials said. The new estimated cost for the project was $119 million, and its new launch date was January 2013.

By November 2011, costs had climbed another $39 million -- $8 million of it to pay for extra work EDD asked Deloitte to perform because of work needed to connect the new system to a new wage database, according to the statement provided by EDD.

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